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Who should set the objectives of the business?

The owners.


List the main stakeholders of a business.

The Government


What is a stakeholder?

An individual or organisation that affects and is affected by the activities of an organisation that affects and is affected by the activities of an organisation.


What would owner’s objectives be?

Maximise their returns, for example they want to be paid high dividends.


What would the objectives of employees be?

Earn more as a reward for their efforts. They may also want the business to grow so they have promotion opportunities.


What would the objectives of suppliers be?

Paid on time.


What would the objectives of the community be?

Want the business to behave responsibly, the business may therefore set a target in local area for recycling and low noise pollution, etc.


What are the objectives of the customers?

Buyers can affect sales and therefore profits, this means that the buyers can affect what constitutes a realistic objective for a business in terms of, say, the likely level of sales and profits.


Objectives of employees

Secure jobs, higher earnings.


Objectives of Owners/Shareholders

High dividends and share price.


Objectives of local community

Local jobs, minimise environmental impact on the community, eg) little noise pollution or congestion.


Objectives of Government

The business should behave legally, pay taxes and grow


Objectives of suppliers

Get paid on time, kept informed of changes to the business, eg) proposed reduction in output


Objectives of customers

The business should be useful, provide accurate information on products, good service, and value for money


Impacts of a business on stakeholders.

Success of the business will affect number of people employed and salaries.
Values of owners and managers will affect the treatment of employees and ethics.
Any business will likely have a large impact on the local area.
The treatment of suppliers will affect success
Success of a business will affect its share price and dividends
A business may try to reduce tax it pays by using whatever legal means it can, or the business could pay what it thinks is a fair tax, even though it could pay less.


How stakeholders influence businesses

Direct action
Refusal to co-operate


What is negotiation?

Employees may negotiate for better pay or suppliers may demand better terms and conditions.


What is Direct action?

Customers can stop buying the products of a business if they are unhappy with the way it behaves (Boycotting). Employees can go on strike and refuse to work if they do not get what they want.


What is refusal to co-operate?

Local councils can refuse to co-operate with a business if they do not like its behaviour. For example, they could refuse planning permission for it to redevelop or expand its operations. Employees could resist any changes that the owners suggest and could show they are unhappy by not working hard.


What is voting?

The owners of a business can make their views clear and can vote on what the organisation should do next. For example, if three people set up a business, it may be that two of the owners outvote the other one when deciding what should be done.


What does a business need to think about, when dealing with stakeholders?

How it communicates, does it need to keep them informed? How?
Wether it should involve certain stakeholders in discussions, such as expansion.


Why is business location important?



What are costs in relation to location?

The amount paid in rent or to buy a premises varies according to location. The rent for premises in the centre of London, for example, is greater than for offices in central Wales. The cost of facilities can affect the profit a business makes.


What are sales in relation to location?

Location may affect wether or not the business gets customers. A hotel or theme park in the wrong location may struggle to attract visitors.


What is image in relation to location?

For some products, where they are produced can have an important impact of their image. A perfume shop from Southampton or a wine from Bradford May struggle to sell. A language school on the coast or a gift shop in a tourist town may be more successful.


How does the type of business influence location?

A web design business could be set up anywhere with a web connection, however a shop must be located close to its potential customers. A service delivering flowers needs to account for the road system.


How does proximity to market affect location?

A business will want to know where its customers are located and ensure that it can reach them easily. More important for some industries than others.


How do competitors influence business location?

In some cases a business will not want to be too close to its rivals, such as petrol stations. However, in other cases, a business will want to be close to its rivals, hotels for example.


How does availability of raw materials affect business location?

Some businesses rely on availability of raw materials. A wine business will be located near the vineries.


How does availability and cost of labour affect business location?

Some businesses need highly skilled workers, therefore they locate themselves near universities so they can easily recruit. Other businesses have relocated production to China and Vietnam where wages are much lower.


How do transport links affect business location?

Businesses wanting to export might need to be near and airport or a port so. They can transport goods easily. If you do business in London but can not afford London rent, you might choose to locate in the suburbs, where rents are cheaper but roads and train links are effective.


How do costs affect business location?

Rents can be very expensive and new businesses may not have the funds to be able to pay, so will set up from home initially. Larger businesses compare costs of that location to potential revenue, it generally is the case that locations with higher costs actually lead to more profits.


What factors influence business location?

Proximity to market
Type of business
Availability of resources
Transport links


Advantages of locating overseas

Cheaper labour
Access to resources that are not easily sourced in the UK
Financial incentives from foreign governments
Avoids protectionist measures by foreign governments, reducing cost as they don’t incur import tariffs.
Overseas markets may be growing fast, therefore you need to locate overseas to satisfy market demand.


Disadvantages of locating overseas

There may be different rules and regulations in other countries
Customers may have different tastes